Ripplewood sees private equity golden age ahead

By Megan Davies

MUNICH, Feb 28 (Reuters) - Ripplewood Holdings LLC Chief Executive Tim Collins said on Thursday that a golden age of private equity was still to come, with opportunities to be found amid a tough U.S. economy that could fall into recession.

Collins, whose U.S. private equity firm specializes in fixing struggling companies, was speaking on the sidelines of the 11th Super Return private equity and venture capital conference in Munich.

"The golden age is when capital is scarce, courage is scarce and you can use your capital, not only to create extraordinary returns but to play a really important role in this transition period in the economy," he said. "I think it's probably the environment over the next two or three years."

Collins' view contrasts with those holding that private equity has peaked. The last few years saw a buyout boom that set records for the size and number of mergers, but which came to an abrupt halt in the summer after the subprime loan crisis turmoil. The financing of large leveraged buyouts virtually ended, putting uncompleted deals on shaky ground.

Ripplewood's landmark transaction was the highly profitable rescue of Japan's Shinsei Bank (8303.T: Quote, Profile, Research, Stock Buzz). Other investments have included Western Multiplex, Advance Auto Parts, Kraton Polymers, Readers Digest and RSC Equipment Rental.

Collins said he thought there was a reasonably high probability of a recession, but his real concern was the potential reaction to a serious downturn in the economy and the credit crunch.

"I'm worried that we're throwing the baby out with the bathwater, that we become so skeptical about markets and market participants that we have destructive regulation," he said. "That's a real fear. We haven't seen it happen yet, but there's a lot of rhetoric about it."

Ripplewood, named after Collins' family's tobacco farm in Kentucky, started with a $460 million buyout fund that closed in 1997. It then raised a number of larger funds, including one for $1.2 billion in Japan that became RHJ International (RHJI.BR: Quote, Profile, Research, Stock Buzz), which is listed on Euronext.